Written by the Fiveable Content Team • Last updated September 2025
Verified for the 2026 exam
Verified for the 2026 exam•Written by the Fiveable Content Team • Last updated September 2025
Definition
Decision-making refers to the process of selecting one option among several alternatives based on preferences or criteria. It involves gathering information, evaluating options, weighing potential outcomes, and making a choice.
Related terms
Rational Choice Theory: This theory suggests that individuals make decisions by weighing potential costs and benefits to maximize their personal interests.
These are mental shortcuts or rules of thumb used to simplify decision-making processes when faced with complex situations.
Prospect Theory: This theory proposes that people's choices are influenced not only by expected outcomes but also by the perceived gains or losses relative to a reference point.